Hitatchi announces major global restructuring

Hitachi expects an annual deficit of £5.5bn this year

Hitachi has announced a restructure of its global business operations, along with cost cutting initiatives following a February projection that the firm will suffer an annual deficit of ¥700bn (£5.5bn).

The Japanese manufacturer has also revealed that Takashi Kawamura, chairman of Hitachi Plant Technologies, will act as president of the company from April when current president Kazuo Furukawa becomes vice chairman.

Hitachi explained that revenue expansion is no longer on the cards because of a decline in customer demand. Fixed costs, such as personnel expenses, will be reduced by ¥200bn (£1.44bn) and procurement costs will be cut by ¥300bn by the end of March 2010. New investments will only be in the form of rationalisation initiatives, the firm said.

Two Hitachi divisions will be spun off as separate companies in July to encourage faster decision making and clearer accountability for earnings.

The Automotive Systems Group will be given its own headquarters, and much of its production will be transferred to China and Thailand. A workforce review will establish a company headcount of 7,600 employees, and a number of manufacturing bases currently operating as part of the division will be closed.

The Consumer Business Group will form the second company, and will undergo a workforce review to achieve a final estimated headcount of 750 employees. The names of both new companies are still under review, said the firm.

Hitachi will also ramp up its environmental efforts, as it sees the area as having a great potential for growth. A new Material Resource Recycling Office will be established within the Business Incubation Division.

New R&D teams under a Battery Systems Division will begin on 1 April to look into creating business strategies for lithium-ion batteries, with the aim of strengthening Hitachi's presence in the market for hybrid vehicles, and creating a customer base in industrial markets.

Finally, Hitachi announced plans to create a Renewable Energy and Smart Grid Division within the Power Systems Group that will create systems to harness solar and wind power, as well as grid interconnection systems and smart grids.